Federal Government Shutdowns
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Background on Government Shutdowns
It is not uncommon for continuing resolutions (CRs) to be adopted before final agreement is reached on appropriations for the new fiscal year. Occasionally, political gridlock prevents adoption of a CR, and the federal government is required to shut down.
The Antideficiency Act of 1870 (13 USC 1341(a)) makes it illegal and subject to prosecution, for any government official to make payments or enter into contracts in excess of congressional appropriations. Therefore, when a new fiscal year begins, if Congress has not enacted regular appropriations or a continuing resolution for particular departments or agencies, the unfunded departments and agencies must shut down – with specified exceptions. Lengthy government shutdowns occurred in 1995, 2013, 2018-19, and 2025.
The Legal Requirement to Shut Down
Although the Antideficiency Act was enacted in 1870, it was not until 1980 that the Department of Justice issued the first of three legal opinions that interpreted the Act as requiring the government to shut down.
In a 1980 Opinion, Attorney General Benjamin Civiletti, issued an opinion on the “Applicability of the Antideficiency Act Upon a Lapse in an Agency’s Appropriation.” The Opinion provided:
(I)f, after the expiration of an agency’s appropriation, Congress has not enacted an appropriation for the immediately subsequent period, the agency may obligate no further funds except as necessary to bring about the orderly termination of its functions, and the obligation or expenditure of funds for any purpose not otherwise authorized by law would be a violation of the Antideficiency Act. 4A Op. O.L.C. 16 (1980)
The Attorney General opined that “the manifest purpose of the Antideficiency Act is to insure [sic.] that Congress will determine for what purpose the government’s money is to be spent and how much for each purpose.” In addition, “because no statute generally permits federal agencies to incur obligations without appropriations for the pay of employees, agencies are not, in general, authorized to employ the services of their employees upon a lapse in appropriations.”
In a 1981 Opinion on “Authority for the Continuance of Government Functions During a Temporary Lapse in Appropriations,” the Attorney General addressed which government functions are permitted to continue during a temporary lapse of appropriations:
Statutory authority for an agency to incur obligations in advance of appropriations need not be express, but may be implied from the specific duties that have been imposed upon, or of authorities that have been invested in, the agency. The “authorized by law” exception in the Antideficiency Act exempts from that Act’s general prohibition not only those obligations for which there is statutory authority, but also those obligations necessarily incident to initiatives undertaken within the President’s constitutional powers. 5 Op. O.L.C. 1
Therefore, the Opinion concluded, “a government agency may employ personal services in advance of appropriations only when there is a reasonable and articulable connection between the function to be performed and the safety of human life or the protection of property, and when there is some reasonable likelihood that either or both would be compromised in some degree by delay in the performance of the function in question.”
Finally, in a 1995 Memorandum Opinion for the Director of the Office of Management and Budget (“OMB”), the DOJ Office of Legal Counsel, reiterated the “life and property exception” explaining that excepted employees may be required to work during a shutdown, but cannot be paid:
A government agency may employ personal services in advance of appropriations only when there is a reasonable and articulable connection between the function to be performed and the safety of human life or the protection of property, and when there is some reasonable likelihood that either or both would be compromised in some significant degree by the delay in the performance of the function in question.
FAQs on Government Shutdown
Why do the departments and agencies that lack funding have to shut down? The Anti-Deficiency Act of 1870 (31 U.S.C. §1341 et seq.) makes it illegal for any government official to make payments or enter into contracts in excess of congressional appropriations.
What happens when a department or agency shuts down? In general, Federal departments and agencies lacking appropriations are required by law to shut down; only “excepted activities” relating to the “safety of human life or protection of property” may continue. Each agency develops its own shutdown plan following guidance released by the White House Office of Management and Budget (OMB).
What happens to federal employees? During a shutdown, employees are furloughed (do not work) until appropriations are enacted. However, certain employees are deemed “excepted” from furlough if they have functions relating to the “safety of human life or protection of property.” Excepted employees continue to work, but are not paid until appropriations are enacted. When appropriations become available, current law provides for back pay to excepted employees and furloughed employees.
The statutory requirement at 31 U.S.C. 1341(c)(2), enacted by the Government Employee Fair Treatment Act of 2019 signed into law by President Trump after the 2018-19 government shutdown. That provision states: “(2) Each employee of the United States Government or of a District of Columbia public employer furloughed as a result of a covered lapse in appropriations shall be paid for the period of the lapse in appropriations, and each excepted employee who is required to perform work during a covered lapse in appropriations shall be paid for such work, at the employee’s standard rate of pay, at the earliest date possible after the lapse in appropriations ends, regardless of scheduled pay dates, and subject to the enactment of appropriations Acts ending the lapse.
What happens to federal contractors? In general, departments and agencies cannot pay contractors during a shutdown; however, contracts that are funded by multiyear appropriations may continue; and contracts for services that cross fiscal years (“severable services”) may continue.
Do shutdowns save money? No. OMB estimated that a shutdown in 2013 resulted in: $2 billion in lost worker productivity and the federal government had to pay millions of dollars in interest on late payments to contractors.
How is a shutdown different from a Treasury default? In a shutdown, the government temporarily stops paying employees and contractors who perform government services due to a lapse in appropriations when a new fiscal year begins or funding authority expires. By contrast, a Treasury “default” would occur if the Federal debt ceiling was reached and Treasury lacked authority to borrow funds to fulfill the legal obligations of the United States to: (1) U.S. bond holders; (2) beneficiaries of Social Security, Veterans’, and other benefits: (3) State and local governments; and (4) Federal contractors. While a government shutdown can be highly disruptive and damaging for a period of time, a government default would have disastrous and lasting economic effects for the United States and the broader global economy.
Agency Contingency Plans:
President Trump’s Office of Management and Budget, unlike previous administrations and the first Trump Administration, has not posted on its website shutdown plans for each of the federal agencies—instead saying “In accordance with Circular A-11, agency contingency plans for a lapse in appropriations are hosted solely on each agency’s website.”
For details on specific department and agency shutdown plans, go to agency websites and do a search for “Contingency Plan for the Suspension of Operations in the Absence of Appropriations.”
The most recent OMB webpage that linked to all agency contingency plans was deleted by the Trump Administration. It is archived here: https://bidenwhitehouse.archives.gov/omb/information-for-agencies/agency-contingency-plans/.
Resources on Government Shutdowns:
January 2026: Partial Government Shutdown Imminent—Key Considerations for Federal Contractors
CRS (2025): Government Shutdowns and Executive Branch Operations. FAQs
CRS (2023) Federal Employee Pay in the Context of a Government Shutdown
CRS (2019): How a Government Shutdown Affects Government Contracts
CRFB (2019): Everything You Should Know About Government Shutdowns
CRS (2018): Shutdown of the Federal Government – Causes, Processes, and Effects (Dec 2018)
CRS (2015): The FY 2014 Government Shutdown Economic Effects
The Atlantic (2013) – The Odd Story of the Law That Dictates How Government Shutdowns Work
OMB (2013): Planning for Agency Operations during a Potential Lapse in Appropriations
OMB (2013): Impacts and Costs of the October 2013 Federal Government Shutdown
CRS (2012): Government Procurement in Times of Fiscal Uncertainty